This week, we beam our searchlight on the biennial Monetary, Credit, Foreign Trade & Exchange Policy Guidelines for Fiscal Years 2018/2019 released by the Central Bank of Nigeria (CBN) this week Wednesday. Basically, the publication was designed to assuage policy ambiguity, demonstrate the direction and policy continuity of the CBN as maintained over time, and to provide prudential guidelines to financial institutions to avoid regulatory capture/sanction.
Of the three key areas addressed by the policy guidelines – Monetary & Credit Policy Measures, Foreign Trade & Exchange Policy Measure, and Consumer Protection; our concentration this week is restricted to the Monetary & Credit Policy Measures section, specifically, the sub-section on interest rate policy.
Therein, the CBN stated among other things that “Interest on savings deposit shall be accrued on a daily basis and credited to the customer’s account at the end of each month”. Secondly, “the balance on a personal savings account on which interest is payable is not subject to any threshold”. Thirdly, “each bank shall continue to ensure the correctness of its charges and interest payable on deposits”. And lastly, “where the bank discovers a non-payment or underpayment of interest on deposits, other entitlements, excessive interest, and/or bank charges, the bank shall refund the charge and/or excessive interest to the customer within two weeks of the discovery/customer complaint, with simple interest at the bank’s prevailing maximum lending rate from the date of such nonpayment, underpayment and/or excessive interest up to the date of refund, along with a letter of apology to the customer. Where necessary, the customer’s account should be reconstructed to determine the excess charges. Any bank that fails to comply with this provision shall, in addition to the refund to the customer, be liable to a penalty as may be prescribed by the CBN”.
To us, this particular part of the guidelines literarily spells out the needed respite to the yearning of many Nigerians on the lack of clarity as to the exact percentage paid as interest on deposit by most Nigerian banks and the correctness or otherwise of their service charges. However, our concern bothers on the CBN’s willingness to firmly uphold this section of the guidelines, given the fact that it (the policy guidelines) had seen 16 months (1yr 4month) of its designed 24 (2yrs) operational months period without significant enforcement of any kind.
Going forward, we hold the view that prompt enforcement of this section of the policy guidelines will bring about more efficient service delivery by all Nigerian banks; deepen the confidence of Nigerians in the banking system and by extension, help in achieving the goal of achieving complete financial inclusion for every Nigerian.
GTI CAPITAL
